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REPORTABLE

  IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6350 OF 2019

MUNICIPAL CORPORATION OF GREATER MUMBAI (MCGM)      ...APPELLANT(S)

VERSUS

ABHILASH LAL  & ORS.             ...RESPONDENT(S)

J U D G M E N T

S. RAVINDRA BHAT, J.

1. The Municipal Corporation of Greater Mumbai (hereafter

“MCGM”) appeals under Section 62 of the Insolvency and

Bankruptcy Code, 2016 (hereafter “IBC” or “the Code”) against the

order of  the National Company Law Appellate Tribunal  (hereafter

variously “NCLAT” and “the Appellate Tribunal”), rejecting its plea

with respect to a resolution plan approved by the National Company

Law Tribunal (“NCLT”) under the provisions of that Code.

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2. MCGM owns  inter alia,  Plot Nos. 155­156, 162 and 168 (all

plots hereafter called “the lands”)  in village Marol, Andheri  (East)

Mumbai. By a contract (dated 20th  December, 2005) SevenHills

Healthcare (P.) Ltd. (the company facing insolvency  proceedings,

hereafter “SevenHills”) agreed to develop these lands (which were to

be  leased to  it for  30 years) and construct a 1500 bed hospital.

MCGM stipulated several conditions, including that 20% of the beds

had to be reserved for use by the economically deprived, and that

SevenHills had to complete the construction in 60 months

(excluding monsoons). The sixty­month period ended on 24th April,

2013; the project however, was not completed. In terms of Clause

15(g), the lease deed  had to be executed  within a  month after

completion. However, the deed was not executed as the project was

not  completed.  Further,  SevenHills  had to  pay lease rent  at the

annual rate of 10,41,04,000. MGCM alleges that there were₹

defaults in these payments. In these circumstances, MCGM issued

a show cause notice on 23rd January, 2018, proposing termination

of the contract/agreement. It is submitted that  SevenHills owed

MCGM an amount of   76,05,07,780.  ₹

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3. On the strength of the contract, SevenHills had borrowed from

banks and financial institutions. It had created security by way of

mortgage of the said lands, citing  Clause  5,  which enabled the

creation of  such encumbrances.  SevenHills’ inability to  repay  its

debts led to the initiation of insolvency proceedings by Axis Bank.

On 13th  March, 2018, before the period given by MCGM’s show­

cause notice ended, the Petition (CP (IB) No. 282/7/HBD/2017) was

admitted by the Hyderabad Bench of the NCLT.   The first

respondent was appointed as the Resolution Professional (hereafter

“RP”); this was approved by the Committee of Creditors (“CoC”) as

required by the Code, on 12 April, 2018. A publication for

expression of interest (“EOP”) was issued on 14 May, 2018; later, on

25th June, 2018 and 16th July, 2018, the terms of the Request for

Proposal (RFP) and criteria for evaluation (of RFPs received) were

approved. As a result of the RFP published, a resolution plan was

submitted by Dr. Shetty’s New Medical Centre (“SNMC”). After

discussion with the CoC, a revised RFP was submitted by the RP.

The revised resolution plan was approved by the CoC on 4th

September, 2018.

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4. The resolution plan projected infusion of over  1000 crores by₹

SNMC. That amount was to be borrowed; for this purpose,

SevenHills’ properties ­ movable and immovable, were proposed to

be secured by hypothecation and mortgage respectively. Operational

creditors were to be paid off to the extent of 75%. Further, the plan

proposed payout to the tune of  102.3 crores to MCGM as against₹

its total claim of  140.88 crores, and also committed to honouring₹

the terms of the agreement entered into by SevenHills and providing

20% of the beds (of the hospital to be constructed) to the poor and

weaker sections of society. The net­worth certificate furnished by

SNMC indicated that it possessed sufficient funds.  

5. MCGM filed an application (I.A. No. 207/ 2018) claiming that

it ought to be declared as a Financial Creditor and a Member of the

Committee of Creditors. It made several submissions, which

indicated that subject to stipulations with respect to completion of

the hospital project in a timebound manner, and subject to SNMC

providing 20% beds in the completed hospital, for use by the

economically weaker sections (and at the disposal of MCGM) and,

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lastly subject to clearing its (MCGM’s) claims to the tune of  140.88₹

crores, it was agreeable to the resolution plan. However, later

during the proceedings, it opposed the resolution plan, arguing that

being  a public body as  well as a  planning  authority, it had to

comply with the provisions of the Mumbai Municipal Corporation

Act, 1888 (“MMC Act”), which meant that all action and approval

had to be taken by the Improvement Committee of the Corporation.

It was also stated that the show cause notice  (“SCN”) dated 23rd

January,  2018 had  been already issued  by  MCGM proposing to

terminate the contract (with SevenHills) to which there was  no

response and that in the absence of a lease, the provisions of

Section  14(1)(d) of the  Code could  not  prevent the  MCGM  from

terminating the agreement. Another argument made was that the

period of CIRP in the case began on 13th  March, 2018 when the

petition was admitted and the period of 270 days expired on 8th

September, 2018; an extension of 90 days provided in Section 12(3)

was granted by the Adjudicating Authority on 4th September, 2018

and the extended period came   to an end on 7th December, 2018;

thus the CIRP has lapsed by efflux of time.

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6. The NCLT, after considering the views of the RP, MCGM, the

creditors and SNMC, held that:

“29. It may be relevant to note here that the Application for approval of the resolution plan was filed on 07.09.2018. The MCGM at a belated stage has come up with its objections to the Resolution Plan with the contention that it is undisputed owner of the plot on which one of the hospitals  of the  Corporate  Debtor in  Mumbai is built. The various objections raised by MCGM as enumerated hereinabove at a belated stage are neither tenable nor acceptable. It is clear from the record that MCGM is taking a stand which is totally contrary to its own decisions and factual submissions. The final prayer of MCGM is to reject the 'resolution plan' and order for liquidation of the Corporate Debtor. The RP in his submissions  has clearly  pointed out  as to  why the averments of MCGM are erroneous and incorrect. For the sake of briefness, the submissions made by RP as stated supra are not discussed in detail once again. This Adjudicating Authority is of the view that the contentions raised by MCGM cannot be accepted due to the conflicting and contradictory stands taken by it in the course of hearings. Further, the contention of MCGM relating to expiry of the period of 270 days is untenable and unacceptable for the reason that the Application by the Resolution Professional for

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the approval of the Resolution Plan has been made well before the expiry of the period of CIRP and the same is in accordance with the provisions of the Code. Therefore, the objections raised by the MCGM are hereby rejected.”

7. The NCLT also held that the plan filed along with the

application met the requirements of Section 30(2) of the Code, and

Regulations  37,  38,  38(IA)  and 39(4)  of IBBI (CIRP)  Regulations,

2016. It also held that the resolution plan did not contravene any of

the provisions of Section 29A and was unanimously approved by

that CoC; it provided for 78.07% of payment to financial creditors

and  75% of payment to operational creditors including doctors,

irrespective  of claims  in incorrect forms.  Further, the resolution

applicant is also addressing the dues payable to MCGM as stated in

the resolution plan. Further, that NCLT observed that on

comparison of the amount offered in the resolution plan with Form­

H submitted by the RP, it was seen that the amount proposed in the

plan was more than that of the value of liquidation of the Corporate

Debtor. It accordingly approved the plan.

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8. Aggrieved by NCLT's order, MCGM approached the Appellate

Tribunal, before which several grounds were urged, including that

since the conditions stipulated in the contract (with SevenHills

Healthcare) had not been complied with, there was no lease deed

and consequently no interest inured in the land, in favour of the

Corporate Debtor. It was also urged that the resolution applicant

was aware that the property belonged to MCGM, and had not vested

in the Corporate Debtor. Despite these circumstances, the proposal

and revised proposal incorporating encumbrances of the lands were

made contrary to law. It was also specifically urged that mandatory

provisions of the MMC Act requiring express authorization by the

corporation for transfer or creation of any interest in land had not

been complied with and resultantly, the proposal and revised

proposal approved by the NCLT, so far as they dealt with the

property and lands, were not enforceable against MCGM.

9. The NCLAT in its impugned order, took note of a memo filed

on behalf of the MCGM on 20th April, 2019 (before the NCLT), that

the revised resolution plan had been accepted and all terms

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specified in its written submissions, were to be incorporated. As a

result, the NCLAT was of the opinion that there was no scope for

interference with the order of the Adjudicating Authority/NCLT.

10. It is argued on behalf of MCGM by its learned senior counsel,

Mr.  Neeraj  Kaul, that no lease deed  was executed in favour of

SevenHills, the Corporate Debtor. MCGM was the undeniable owner

of the land;  as  there were no assets  of the Corporate  Debtor, it

stated  that  a duly  registered  lease deed would be executed.  The

proposal and revised proposal seeking direction with regard to the

lease deed, had to be necessarily dealt with in accordance with law.

This meant that unless MCGM, expressly approved the revised

plan,  whereby  a lease  deed could  be executed in favour of the

SevenHills Healthcare Pvt. Ltd. (or in favour of the resolution

applicant SNFC), neither the adjudicating authority nor the NCLAT

could issue any direction seeking to bind MCGM with respect to the

manner it had to deal with properties that belonged to it.

11. It was emphasised that the effect of the impugned order is to

prevent  MCGM  from violating the law.  The  direction  which  was

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highlighted was in violation of Section 92 of the MMC Act. Learned

senior counsel  underlined that the  written  submissions filed  on

behalf of MCGM could not be construed as an admission, or that

MCGM was bound to agree to the revised proposal. It was

alternatively argued that at best, these submissions could be

considered as concessions of law which were never binding on

MCGM.

12. It was argued that there was no question of incorporating any

direction or approving the revised plan, which in any manner

affected MCGM’s properties. In this context, Mr. Neeraj Kaul,

learned Senior Counsel, urged that the terms of the original

contract (dated 20th December, 2005) had been violated; the 1500

bed hospital had not been completed by the stipulated date.

Furthermore, arrears of lease rentals had mounted together every

attendant liability. In these circumstances, even before the

insolvency proceedings were initiated, MCGM issued a show cause

notice proposing to terminate the contract. It was further

emphasised that since the terms of the contract were infringed, in

fact, there was no subsisting  lease which could have been dealt

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with by the revised proposal and later by the Adjudicating

Authority. It was submitted that the impugned order has completely

noted these salient aspects.

13. On behalf of the RP (who has been arrayed as the first

respondent) it is argued  by  Mr.  C.A. Sundaram, learned senior

counsel that MCGM had categorically consented to the resolution

plan  in  writing  before the  NCLT and  the  Appellate  Tribunal.  He

points out that  in the written submissions dated 28th  November,

2018,  29th  April,  2019  and  14th  May,  2019  MCGM categorically

stated that the resolution  plan  be approved and its application

before the NCLT ought to be disposed of in terms of the

commitment given by the resolution applicant/SNMC. It is pointed

out that the Appellate Tribunal, after hearing the submissions of

MCGM that it had no objections to the resolution plan, affirmed it.

MCGM, counsel submitted, has not refuted that such a statement

was made before the NCLAT. It is therefore the undisputed position

that MCGM had no objections to the resolution plan. That being the

case, counsel argues that the appeal is not maintainable.

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14. Mr. Sundaram argued that MCGM’s contentions that no

interest or leasehold rights in the land were created in favour of the

Corporate Debtor, flies in the face of its letters and also its

application to the NCLT, which in para 4, admitted that the lands

were leased to the Corporate Debtor. In fact, MCGM filed the

application claiming that the lease was a capital or finance lease

and the unpaid lease rentals were a financial debt within the

meaning of the Code. Unlike the written submissions, MCGM did

not even explain on what basis it had filed the application to the

NCLT regarding its position that no leasehold rights subsisted.

15. Learned senior counsel submitted that MCGM was invited to

attend and participate in CoC meetings due to its position as owner

of the land on which the Mumbai hospital of the Corporate Debtor

is located. The issue of whether or not the corporate debtor has any

leasehold rights under the contract (of 2005) is a disputed question

of fact which can only be adjudicated upon in civil proceedings after

conducting a civil trial.

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16. It is also argued alternatively, that assuming for the purpose

of argument that no leasehold rights were created in favour of the

Corporate Debtor, the resolution plan does not create any leasehold

rights in favour of the respondent applicant/SNMC. Learned senior

counsel argued that the resolution plan merely envisages a change

in the shareholding of the Corporate Debtor but does not transfer

any of MCGM’s assets to SNMC. Therefore, it is false to suggest that

the resolution plan transfers MCGM’s assets to SNMC. It was

argued  furthermore that though MCGM was not  entitled to,  nor

treated as a financial creditor, it was nevertheless invited to

participate in CoC meetings, interact as well as negotiate favourable

terms with potential resolution applicants. To further safeguard

MCGM’s interests, the RFP also required all prospective resolution

applicants to submit their plans to resolve the dispute with MCGM.  

17. Mr. Sundaram also submitted that SNMC’s revised proposal to

MCGM assured repayment of its entire dues. In light of a proposal

of this nature, MCGM’s stand seeking liquidation of the Corporate

Debtor appears not only arbitrary but also prima facie vindictive.

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18. It is also submitted that the resolution plan is absolutely

unconditional in nature and in no manner contingent on the

resolution of the  dispute with MCGM.  It is  submitted  that  such

unconditionality is the most fundamental aspect of the resolution

plan. This unconditional nature is recorded in the minutes of

meetings of the 8th meeting of the CoC held on 20th August 2018.

MCGM participated in the meetings of the CoC, including the 8th

CoC meeting, and was provided a copy of the minutes

contemporaneously. These minutes record SNMC’s categorical

statement that  the negotiations with MCGM are  in progress and

that the resolution plan is unconditional and in no manner

dependent on the outcome of such negotiations. Further, there is

no provision in the resolution plan  (and none has been cited by

MCGM) which suggests that the plan is conditional on settlement

with it (i.e. MCGM).

19. It is also submitted that any dispute with MCGM in relation to

the lease of the underlying land has no bearing on the validity of the

resolution plan, under Section 31 of the Code. Having been

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approved by the CoC and the NCLT on merits, the plan attained

finality and binds MCGM as a stakeholder in the Corporate Debtor.

MCGM  therefore, cannot hold the entire  CIRP of the  Corporate

Debtor to ransom despite not even having raised a single objection

on the validity of  any specific term in the resolution plan under

Section 30(2) of the Code.

20. Mr. Ramji Srinivasan, appearing on behalf of the CoC, argued

that the financial creditors were interested in ensuring that their

dues were paid, preferably in full. SNFC’s resolution plan held out

the best assurance toward that end. He also argued that the

question of  obtaining  any approval  under  Section 92A either for

creation of charge, or for any other purpose did not arise, because

the terms of the contract, which in fact amounted to a lease (as it

was a  registered  instrument  and MCGM had received over  10₹

crores as initial lease consideration). Therefore, the resolution plan

approved by the NCLT, and later, NCLAT, were sound and did not

call for interference.

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21. It was argued, furthermore, that the reliance on Section 92 of

the MMC Act is misguided as it seeks to superimpose provisions of

the MMC Act on the provisions of the Code. This is clearly

impermissible in terms of the non­obstante provision contained in

Section 238 of the Code.

22. Mr. K.V. Vishwanathan, learned senior counsel for SNFC,

argued that the plan approved provided the best solution for the

financial woes of the Corporate Debtor. It was argued that SNFC

never represented that it would mortgage or obtain any loan on the

strength of the lease. Nor did it ever urge that MCGM’s permission

was not necessary. He pointed to the terms of the resolution plan

and  submitted that they  were subject to  MCGM’s  obligations to

follow the law.  

23. It was submitted that the proposed plan contemplates

compliance with the various conditions of the contract agreement

including without limitation, 20% reservation of beds for MCGM's

employees and settlement of MCGM's claimed dues. The resolution

plan proposed payment to MCGM (which was enhanced to 100% by

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a later proposal) at clause 2.2.2(b). Further, clause 2.2.3(f) of the

resolution plan again records the proposed payment to MCGM by

stating that while the resolution professional has not admitted the

claims submitted by MCGM, SNMC recognizes such dues payable to

it and shall pay  102 crores in terms of the offer made to MCGM as₹

recorded.

24. In the present case, Section 92 of the MMC Act has no bearing

on  the  validity  of the resolution plan, the  approval  order  or the

impugned order. Section 92 of the MMC Act mandates and

prescribes the manner in which disposal of land belonging to the

appellant would take place. However, the resolution plan does not

contemplate any disposal of the said land or creation of any

additional rights and obligations of MCGM or the Corporate Debtor

in relation to the lands. It is merely the shareholding of the

Corporate Debtor which undergoes a change pursuant to the

resolution plan. MCGM cannot place any embargo on such

shareholding changes by resorting to proceeding under the Code.

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25. It was urged that SNMC does not acquire any interest in the

said land and only acquires managerial control over the Corporate

Debtor by way of holding equity shares  in the Corporate Debtor.

Therefore, there arises no question of Section 92 of the MMC Act

being violated through the resolution plan.

Discussion regarding the insolvency process and relevant

provisions of the MMC Act

26. On admission of an insolvency application preferred by a

financial creditor/operational creditor, a moratorium is declared on

the continuation and initiation of all legal proceedings against the

debtor. The NCLT appoints an interim resolution professional

(“IRP”). The moratorium operates till the completion of the

insolvency resolution process which, by law should be completed

within a mandated time frame. During the moratorium period, the

debtor cannot transfer, encumber or sell any asset. Upon

appointment of  an IRP, the board of  directors stands suspended

and  management vests  with the IRP. These professionals (IRPs)

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have to conduct the  insolvency resolution process, take over the

assets and management of the company, assist creditors in

collecting information and manage the insolvency resolution

process. The term of the IRP continues until  an RP is appointed

under Section 22. The IRP has to first determine the debtor’s

financial position through information collection regarding assets,

finances and operations. Information may include data relating to

operations, payments, list of assets and liabilities. The IRP further

has to receive and collate claims submitted by creditors.

27. The RP selected by the NCLT has to constitute a committee of

creditors (CoC) comprising all the financial creditors of the

corporate debtor.  This provision is  aimed at creditors adopting a

collective approach towards insolvency resolution instead of

proceeding individually. Key decisions of the process, and the plan

to be eventually finalized are to be approved by the CoC upon its

satisfaction that the provisions of the most acceptable plan would

ensure that their dues are cleared.

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28. The Code is principally aimed at aiding a corporate debtor in

the resolution of its insolvency condition without approaching

liquidation. The key to this process is the finalization of an

insolvency resolution plan. A suitably structured plan would

provide  for  repayment of the debtor’s  outstanding  liabilities  after

evaluating its financial worth, at the same time ensuring its survival

as a going concern. The resolution plan must necessarily provision

for repayment of the debt of operational creditors in a manner such

that  it  shall  not be  lesser than the amounts that would be due,

should the debtor be liquidated per Section 30(2) of the Code. Also,

the  plan should identify the  manner  of repayment  of insolvency

resolution costs, the implementation and supervision of the

strategy, and should be in compliance with the law. If the terms

(including the terms of repayment) under the resolution plan are

approved by the committee of creditors, it has to be further

approved by the NCLT, which is the adjudicating authority.

29. In this case, it is not the provisions of the IBC which this court

has  to primarily  deal  with; it is rather  whether the process and

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procedure adopted by the NCLT and later the NCLAT, in overruling

MCGM’s concerns and objections with regard to the treatment of its

property (i.e. the lands) is in  accordance  with law.  The relevant

provisions  of the  Municipal  Corporation of  Greater  Mumbai  Act,

1888 are extracted below:

Provisions governing the disposal of municipal

property:

Section 92. With respect to the disposal of property belonging  to the corporation other  than property vesting in the corporation for the purposes  of the  Brihan  Mumbai  Electric  Supply and Transport Undertaking, the following provisions shall have effect, namely: —  (a) the Commissioner may, subject to the regulations  made in this behalf, dispose of, by sale or otherwise, any movable property belonging to the corporation not exceeding in value, in each instance, five lakh rupees, of grant a lease of any immovable property belonging to the corporation, including any right of fishing or of gathering and taking fruit and the like, for any period not exceeding twelve months at a time :  Provided that every lease of immoveable property granted by the Commissioner (other than a contract for  a monthly  tenancy) the annual  rent where of at a rack rent exceeds 6 [fifty thousand

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rupees]  shall  be reported  by him,  within fifteen days after the same has been granted, to the Improvements Committee;  (b) the Commissioner may, —  (i) with the sanction of the concerned Committee, dispose off, by sale of otherwise any movable property held by the Corporation, the value of which exceeds rupees five lakhs ;  (ii) with the sanction of the 9[Standing Committee], dispose  off any  moveable  property  held  by the Corporation, the  value  of  which  exceeds rupees two crores ;  (iii) with the sanction of the concerned Committee, grant a lease (other than a lease in perpetuity) of any immovable property belonging to the Corporation, including any such right as aforesaid; or sell, or grant a lease in perpetuity of any immovable property, the value of which does not exceed 50,000 rupees or  the annual rent of which does not exceed 3,000 rupees ;  (c) with the sanction of the corporation, the Commissioner may lease, sell or otherwise convey any immovable property belonging to the corporation  (cc) the consideration for  which  any immovable property or any right belonging to the corporation may be sold, leased or otherwise transferred shall not be less than market value of such premium, rent or other consideration;

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(d)  sanction of  the corporation under clauses  (b) and (c) may be given either generally for any class of cases or specially in any particular case ;  (dd)  notwithstanding anything contained  in this section, the Commissioner may, with the sanction of the Corporation, and with the approval of the State Government, grant a lease of immovable property belonging to the Corporation to a Co­ operative Housing Society formed exclusively by the officers and servants of the Corporation, or to a public trust exclusively for medical and educational purposes registered under the Bombay Public  Trust  Act,  1950  or to  a society registered under the Societies Registration Act, 1860 or the Maharashtra Co­operative Societies Act, 1960, a public trust registered under the Bombay  Public Trust  Act, 1950, or a company registered  under the  Companies  Act,  1956  3[or any person for the purposes of provision of public latrines, urinals and similar conveniences or construction of a plant for processing excrementitious and other filthy matters of garbages] or to a person who is dishoused as a result of the implementation of any Development Scheme of the  Corporation  or to  a  Co­operative Housing Society formed exclusively by the persons  who  are  dishoused  as  a result of the implementation of any Development Scheme of the Corporation, at such rent, which may be less than  the market  value of the  premium, rent,  or other consideration, for  the grant of such lease,

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and subject to such conditions, as may be provided by the bye­laws made under section 461;  (ddd) notwithstanding anything contained in this section, the Commissioner may, with the sanction of the Corporation, and with the approval of the State Government, grant a lease for a period not exceeding 60 years, of  municipal land which  is declared as a slum area under the provisions of the Maharashtra Slum Areas (Improvement, Clearance and Re­development) Act, 1971 to a co­ operative society of slum dwellers occupying such land, at such rent, which may be less than the market value of the premium, rent, or other consideration, for grant of such lease, and subject to such conditions, as the Corporation may impose. The approval of the State Government under this clause may be given either generally for any class of cases of such lands or specifically in  any  particular case  of such land : Provided that, the Commissioner may in like manner renew, from time to time ; the lease for such period and subject to such conditions as the Corporation may determine and impose ;  

(dddd) All leases granted by the corporation of the immovable properties belonging to the corporation for whatever term shall be subject to the following conditions in addition to the conditions stipulated in the  Lease­deed or  Lease­agreement  executed by the corporation, namely: —

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(i) Leasehold rights in respect  of the  properties belonging to the corporation and given on  lease may be further assigned or transferred only with the prior permission of the Commissioner, on payment of such premium on account of unearned income and transfer fees or charges at such rates as may be specified by the corporation, from time to time.  (ii) In the case of any contravention of the provisions of sub­clause (i), the lessee or transferor of such leasehold rights, shall be liable to pay penalty in addition to such premium and transfer fees or charges, at such rates as may be specified by the corporation, from time to time.  (e) the aforesaid provisions of this section shall apply, respectively, to every disposal of property belonging to  the Corporation made under or for any purpose of this Act;  Provided that nothing in this section shall apply Dr. Bhau Daji Lad Museum or to the site thereof referred to in section 89C except with the previous sanction of 5[the 6[State] Government].  Section 92A. Where—  (1) the Commissioner has transferred by way of sale or exchange any immovable property belonging to the Corporation and the terms of such transfer direct that the property shall be applied or enjoyed in a particular manner or the use or enjoyment thereof shall be restricted in a particular manner, or

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(2) the owner of any immovable property has entered  into an agreement with  the Corporation concerning  the  application,  enjoyment  or  use of the property  in a particular manner,  such term, condition or obligation shall be held to be annexed to the property which is the subject­ matter of the transfer or agreement and shall be enforced against the transferee or owner and all persons deriving title or interest under or through him, notwithstanding—  (a) any law for the time being in force, and  (b) that the Corporation are not in possession of or interested in any immovable property for the benefit of which, the term, condition or obligation was agreed to, entered into or imposed.”

30. At this stage, it would be relevant to notice certain conditions

in the contract.   Clause 2(i) stipulates the minimum lease rent as

10.40 crores for which SHCL agreed to pay 0.1% over and above₹

the  minimum  lease rent.  Clause  5 of the  agreement  permitted

SevenHills to mortgage and/or create charge of the schedule

property. The conditions read as follows:

"5.  The Owner hereby agrees to permit and allow the  SHCL on the   terms  and conditions to  be approved by the Owner which permission/approval shall not be unreasonably withheld, to mortgage and/or create charge on the Schedule Property and/or SHCL's leasehold right

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thereon with or without the Buildings on the Schedule property during the lease period or prior thereto i.e. during the project period) in any manner whatsoever either in whole or in part as SHCL may require from time to time to the satisfaction of the lenders, for the purpose of raising financial assistance from the Financial Institutions/Banks/NBFOs/Co­operative Societies/ Trust/ UF/ Partnership/Proprietary Firm and any other lending individuals/institutions,  whether incorporated  or not, for any purpose for and in connection with the said Project including for the purpose of commencing, carrying out and completing the construction of the Buildings, setting up of hospital, Medical Educational institutions commercial  and other  establishments  within the Frame work of  Development Control  Regulations in force, in such Buildings, their running, maintenance, renovation, reconstruction etc.   For this  purpose, the  SHCL shall  have to  apply for permission not mortgage and/or create charge to Municipal Commissioner two months  in advance and if the approval is not received within two months from the date of receipt of such a request by the Commissioner, it will be deemed as approved and SHCL shall be at liberty to create the mortgage of the Schedule Property in favour of the Lenders without any recourse to the Owner."

28

31. Clause 15(a) which stated that the lease deed had to be

entered into upon on completion of the project and contained other

conditions, pertinently,  reads as follows:

"15. LEASE OF PLOT:

a) Lease period:

i) The SHCL shall enter into a Lease Deed on completion of project period for leasing the plot to SHCL for the period of 60 years. After 60 years, the lease period will be extended with the mutual consent of  Owner  and  SHCL on the terms that may be mutually agreed upon by both the parties for further period.

ii)  The  lease period of  60 years shall  commence from the date  of completion of the Project period.

iii)  On completion of the said Project the Owner shall issue to SHCL 'Project Completion Certificate'. Till the completion and commissioning of the project and running of the Project facilities, till the end of lease period, this Contract Agreement is to be read, in conjunction with the said Lease Deed which both Parties will enter into on completion of the project period.

iv)  The SHCL shall  complete  the construction of the hospital building within the project period of 60 months excluding monsoon.   the MCGM shall be liable to issue the Project Completion

29

Certificate on written application by SHCL to that effect after completion of the project.

xxxxxx xxxxxx xxxxxx

e) Penalty for delay:

i) SHCL shall complete the  entire  Project  and open the facility to public use within the approved time limit.   SHCL shall submit the work programme with defined milestones.   the progress of  the work shall be strictly as per the programme of construction submitted by SHCL and approved by the Commissioner.

In case SHCL fails to complete the Project as aforesaid within the said Project Period of 60 (sixty) months excluding monsoon from issuance of Commencement Certificate, and unless such failure is due to force Majeure conditions, penalty for delay shall be charged for the period of delay which will be equivalent to 25% of Lease Rent which  SHCL would  have  paid to the  Owner for that period, had the Project been completed within the Project Period and this shall be in addition to lease rent.

ii) SHCL shall have to separately pay the compensation for delay to the Owner at the end of notice period.

iii) However, in case any delay occurs because of circumstances beyond the control of SHCL only

30

suitable extension in the period of the Project without imposing penalty or demand for compensation for delay shall be granted for completing the Project.   No other claim or compensation of whatsoever nature shall be entertained.

xxxxxx xxxxxx xxxxxx

g) Lease Deed:

A Lease Deed shall be executed as per draft annexed to this Contract Agreement as Annexure­'II'   within one month from the expiry of the Project period or on intimation from the owner whichever is earlier.

17.   MORTGAGE OF PLOT AND BUILDINGS

a) The SHCL is hereby allowed to sublease; mortgage and create a charge on the said plot and buildings either in part or in total to the satisfaction of lenders for the purpose of raising financial assistance to commence, progress, complete, commission and run the hospital complex and other commercial activities during the Pendency of the lease period, from the financial institutions/ FIIS/Banks/Mutual Funds/Co­operative Societies, Trusts/individuals/HUFs/Partnership  Firms,  other lending institutions and lenders of any constitution for the said Project with the prior permission of the Commissioner, which permission shall not be unreasonably withheld, during the Project period

31

and/or during the subsistence of the lease and the Owner shall be kept  informed of such deals after permission  by the  Commissioner  and SHCL shall file relevant documentary evidence to that effect for record of the owner.

The permission which shall be granted by the Owner to SHCL to mortgage the Schedule Property in favour of the lender (s) for raising finance will remain irrevocable and irreversible during the tenure of the Project period and lease period except when the contact is  terminated.  In case the contract is terminated for valid reason, the Owner shall not bear any cost and consequences of resultant termination of mortgage by SHCL to any Financial Institution. While the right of ownership will remain with the Owner, the leasehold rights to the property will  remain free from encumbrances and dedicated to the lenders during the currency of loan  or the lease  period whichever is earlier and the lenders shall continue to enjoy the same rights and privileges as that of SHCL.

SHCL is also hereby allowed, with prior written permission from Commissioner to sublet the whole or part thereof and/or the buildings on the Schedule Property.  The SHCL shall be entitled to sublet the Schedule Property and the Building/s thereon from time to time in whole or in part for any duration (not beyond the lease period) to any other Party/ies (sub­lessee/s) on such terms and

32

conditions, as may be agreeable to SHCL within the frame work of the tender and this Agreement and for the same or similar purposes for which agreement is intended, by means of duly registered Deed/s. SHCL shall have to apply for permission to Municipal Commissioner two months in advance and if the approval is not received within two months from the date of receipt of such a request by the Commissioner, it shall be deemed as approved."

32. A cumulative reading of the stipulations reveals that the

contract/agreement contemplates that the lease  deed  was to  be

executed  after  the completion of the project.   The contract reveals

that (a) the project period was for 60 months starting from the date

excluding the monsoon period; (b) by Clauses 5 and 17, SevenHills

could mortgage the property for securing advances from financial

institutions for the construction of the project and thereafter

towards its working. Such mortgage/charge or interest was subject

to approval by MCGM. In the event the contract was to be

terminated, it was agreed that MCGM would not in any manner be

liable towards the mortgaged amount and all its rights and

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ownership  would  continue to vest in it free from encumbrances

(Clause 17).

33. The show cause notice in this case preceded admission of the

insolvency resolution process.   In view of the clear conditions

stipulated in the  contract,  MCGM reserved all its rights  and  its

properties could not have therefore, in any manner, been affected

by the resolution plan.   Equally in the opinion of this Court, the

adjudicating authority could  not have approved the plan  which

implicates the assets of MCGM especially when SevenHills had not

fulfilled its obligations under the contract.

34. The argument of the RP, the financial institutions (CoC), and

the SNMC with regard to MCGM's interest not being affected, in this

court's opinion is insubstantial.  SNMC's proposed insolvency plan

on the one hand no doubt provided for the liquidation of MCGM’s

liabilities initially to the tune of  102 crores (later revised to over₹

140 crores).  However, the provisions of the resolution plan clearly₹

contemplated infusion of capital to achieve its objectives. One of the

modes spelt out in the plan for securing capital was mortgaging the

34

land.   Initially, no doubt, SNMC stepped into the shoes of

SevenHills and assumed its control.  What is important to notice is

that the corporate restructuring was a way of  taking over of the

company’s liquidation  by  SNMC as it  was  not only  Seven  Hills’

project with shares and liquidation of debts, but also the

restructuring of the company’s liabilities if necessary, by creating

fresh debts and mortgage of the land which directly affected MCGM.

35. Section 92 unequivocally prescribes the method whereby

MCGM’s properties can be dealt with through lease or by way of

creation of any other interest.  The only mode permitted is through

prior permission of the corporation.  It is a matter of record that in

the present case, the resolution plan was never approved by the

corporation and that it was put to vote.   The contesting parties,

including the RP and CoC were unable to point out to anything on

the record to  establish that  a valid  permission  contemplated  by

Section 92 was ever obtained with regard to the proposal in the

resolution plan. The proposal was approved by the NCLT and

MCGM’s appeal  was rejected  by  NCLAT. The  proposal could be

35

approved only to the extent  it did not result  in encumbering the

land belonging to MCGM.

36. It is  evident  from a plain reading of  Section 92(c), that  the

Commissioner (of MCGM) is empowered to, with the sanction of the

corporation, “lease, sell or otherwise convey any immovable property

belonging to the corporation.”   It is not in dispute that the original

contract entered into on 20­12­2005 contemplated the fulfilment of

some important conditions, including  firstly,  the completion of the

hospital project within a time frame; and secondly, timely payment

of annual lease rentals. It is a matter of record that the hospital

project was scheduled to be completed by 24th April, 2013. MCGM

cites Clause 15(g) of the contract to urge that within a month of this

event, i.e. completion of the hospital, a lease deed had to be

executed. This event never took place. Therefore, the terms of the

contract  remained, in  the  opinion of the court,  an agreement to

enter  into a  lease;  it  did not  per se  confer any right or  interest,

except that in the event of MCGM’s failure or omission to register

the lease (in the event SevenHills had complied with its obligations

36

under the contract), it could be sued for specific performance of the

agreement, and compelled to execute a lease deed. That event did

not occur; SevenHills did not complete construction of the 1600 bed

hospital. Apparently, it did not even fulfill its commitment, or pay

annual lease rentals. In these circumstances, MCGM was

constrained to issue a show cause  notice  before the insolvency

resolution process began, and before the moratorium was declared

by  NCLT on  13   th    March,  2018.  According to  MCGM,  in terms of

Clause 26 (of the contract), even the agreement stood terminated

due to default by SevenHills. This court does not propose to

comment on that issue, as that is contentious and no finding has

been recorded by either the adjudicating authority or the NCLAT.

37. In  Ram Singh Vijay Pal Singh & Ors. v. State of U.P. & Ors

(2007) 6 SCC 44, this court dealt with a similar provision, requiring

prior approval of the statutory authority without which the property

could not be disposed of. The court held that:

"The proviso to Sub­section (1) of Section 12 of the Act would show that the Mandi Samiti (Committee) is not empowered to transfer any immovable

37

property without the previous approval in writing of the  State  Agricultural  Produce  Markets  Board (Mandi  Parishad).  Section  26­L of the  Act  deals with the powers and functions of the Board. The Director of Mandi Parishad (Board) has not been conferred any power whereunder he may issue a general direction that the shops, godowns and sheds of the Mandi Parishad shall be transferred or sold to the traders on hire­purchase basis. Therefore, the appellants can derive no benefit from the letter of the  Director  dated  4.11.1995, wherein it was mentioned that a decision had been taken to give the shops on hire­purchase basis. In the counter affidavit the respondents have specifically  asserted that the Board  never took any such decision to sell the property of the Mandi Samiti to the traders either on hire­ purchase basis or otherwise. No document has been filed to show that the Board ever took any such decision. It is the  case  of the respondents that the  letter sent by the Director was his own action  which  had  never  been  authorized  by the Board. At any rate the proposal made by the Director never fructified as no such decision was taken by the Board and the Board never authorized the Mandi Samities (Committees) of various districts in the State to transfer the property of the Samiti in favour of the traders of agricultural produce who had been allotted the shops, godowns and sheds by the Mandi Parishad. In this view of the matter, the appellants

38

have no legal right to claim that the property be given to them on hire­purchase basis."

38. In  Essar Bulk Terminal Limited & Anr. v. State of Gujarat &

Ors. (2018) 3 SCC 750, again, this court held as follows:

"16. Despite this, what is clear from the record is that the Appellants appear to have actually dredged the channel to a depth of 14 meters and appear to have reclaimed an area of 164 hectares plus 170 hectares to the south of the mangroves, without any permission at all. When this was pointed out to Shri Mihir Joshi, the answer given was that when permission is granted Under Section 35(1) of the Gujarat Maritime Board Act, a letter granting  such  permission  specifically says that it is permission that is granted Under Section 35(1) and for this purpose, a letter dated 2nd August,  2008 was referred to.  According to him, therefore, the letter dated 14th June, 2007, which referred only to an NOC for reclamation, could not be given  the status of  permission Under Section 35(1). According to the learned Counsel, therefore, if Section 35(1) were to be read with Section 35(2), it would be clear that permission for reclamation would only be necessary if a private asset were to be created in the hands of a private person. However,  it is clear that the asset to be created belonged only to the Government of Gujarat and it was for the GMB to grant permission to the

39

Appellants to use the same. We are afraid that it is difficult for us to accept this line of argument. Section 35(1) is couched in negative language and does not refer to private rights being created. Section 35(2) cannot be read so as to throw light on Section 35(1), as Under Section 35(2), the GMB is only given a discretionary power  to require  a person, who has acted in contravention of Section 35(1), to remove the illegal erection. The wide language of Section 35(1) cannot be whittled down by  Section  35(2) in the  manner  argued  by  Shri Joshi, as the GMB may or may not utilise the discretionary  power granted to it  Under  Section 35(2). The plain language of Section 35(1) cannot be curtailed by reading by inference, into Sub­ section (2), the fact that the GMB may, by notice, require a person to remove an erection, only when it has been made without previous permission, so as to create  a  private  asset in the  hands of a private person. The wide language of Section 35(1) makes it clear that any reclamation within the limits of the GMB cannot be carried out except with the previous permission in writing of the GMB. It is clear, therefore, that dredging to a depth of below 8 meters and reclamation of any area to the south of the mangroves was done by the Appellants in the teeth of Section 35(1) of the Gujarat Maritime Board Act. 17. Mr. Sibal laid great stress on the letter dated 15th November, 2012 to show that, in point of fact, what the Appellants were really angling for was to

40

conduct commercial operations beyond the captive requirements of the Essar Steel  plant  at  Hazira. This letter, while asking for an addition of 3700 meters in addition to the existing 1100 meters waterfront, also went on to speak of developing a 700 meters berth, along with the GMB, for handling commercial cargo. Apart from this, Essar planned to build a world class container terminal and a dry dock, which would serve the shipping industry generally. It  also proposed to reclaim a further  334  hectares land on the southern side with the additional dredged material. A perusal of this letter would leave no doubt about the fact that despite Essar Steel's production being at much less than what was projected, the Appellants' continued demands would show that the real motive  was  to  go beyond a captive  jetty and  to develop a commercial port which, as we have seen, cannot be done without a global tender under the Gujarat Infrastructure Development Act. 18. As stated hereinabove, as many as three MOUs were executed between the Appellants, the GMB and the State Government, which MOUs were  valid  only for  a  period  of  12  months  and were stated not to have granted any right to the Appellants,  who would  incur  all the  expenditure for the same. This being the case, it is a little difficult to appreciate Shri Joshi's contention that any legitimate expectation could be based on any of the aforesaid expired MOUs. The High Court is correct in its conclusion that no such expectation

41

could  possibly  have  arisen  out of the  aforesaid MOUs or the correspondence between the Appellants and the GMB referred to.

19. It is also important to note from the correspondence  between the  Appellants  and the GMB, that the Appellants were clearly told that the land to be reclaimed by the Appellants would not only belong to the Government of Gujarat, but also that the GMB could utilize the aforesaid land for any purpose. What seems to emerge on a reading of the letters between the parties is that the Appellants  wished to  dredge the canal,  at their own cost, which was next to their captive jetty, for their own purposes,  for which they obtained the necessary permission. However, since dumping of earth, which would emerge as a consequence of dredging, into the  open sea would be extremely expensive, it  was stated that instead  this  earth could be dumped to create reclaimed land next to the captive jetty,  which would  then benefit  both the Appellants and the GMB. In point of fact, 140 hectares out of 195 hectares that is reclaimed by the Appellants is  allocated  to the  Appellants for their own purposes, the  balance to  be  given  as and when a jetty of 1100 meters plus 3700 meters of  waterfront is constructed. The  argument that huge amounts had been spent to reclaim land is wholly fallacious­huge amounts were spent to dredge a canal which was permitted as the Appellants alone were to bear the cost, and as an

42

increased draft would benefit all, as the canal was open to all to use. Therefore, any plea as to a legitimate expectation of reclaimed land being allocated for the Appellants'  own use, thanks to large amounts being spent, is contrary to the correspondence by the Appellants themselves."

An identical approach was adopted in Saroj Screens Pvt. Ltd. v

Ghanshyam & Ors., (2012) 11 SCC 434.

39. The principle that if a statute requires a thing to be done in a

particular manner, it should be done in that manner or not at all,

articulated in Nazir Ahmad v. Emperor, AIR 1936 PC 253, has found

widespread acceptance. In the context of this case, it means that if

alienation or creation of any interest in respect of MCGM’s

properties is contemplated in the statute through a particular

manner, that end can  be achieved only through the prescribed

mode, or not at all.

40. This Court also notices that an initial No Objection Certificate

was issued by MCGM voluntarily, for creation of interest in respect

of its properties. Upon its refusal to grant approval, SevenHills filed

proceedings under Article 226 before the Bombay High court (W.P.

43

No 1728 of 2011), in which the Court directed to grant issuance of

certificate. At the same time, the High Court observed as follows:  

"11. ...... It is, however, required to be noted here that the Corporation is nor borrowing any amount for  its purpose....If the petitioners want  financial assistance from the Bank, naturally, it cannot mortgage only the superstructure but the entire property is required to be mortgaged. Aprart from that  even if there is  a  defect in the title in the matter of creating mortgage, the Corporation is not going to  suffer in  any  manner  and  it is for the concerned Bank to consider the same while giving financial assistance. The Corporation is not going to get any financial assistance from the Bank and, therefore, whatever documents which the petitioners may execute in favour of the Bank, the Corporation is not bound by the same....The said NOC can be granted by the Corporation without prejudice to its rights and contentions that the land in question belongs to them and, therefore, no mortgage could have been created for the same. It is  always open  to the  Corporation to  ascertains right to the extent that they are not bound by execution of such documents with the Bank....However, such grant of NOC, would be without prejudice to the rights and contentions of the Corporation. The Corporation may also mention such aspect while giving NOC to the petitioners that such NOC is given without prejudice to the rights and contentions that their

44

land could not have been mortgaged by the petitioners with the Bank. (emphasis supplied)

12. ......Apart from the same, by granting NOC it cannot be construed that the Corporation has also mortgaged its property in favour of Axis Bank in any manner....

15. ....It is clarified that this order is passed without prejudice to the rights and contentions of both the sides and it will have no effect so far as deciding the matter on merit is concerned.....”

***************                         *************

41. The material placed on record by MCGM before this Court also

reveals that the meeting held by the Corporation on 14th December,

2018, referred back to the resolution proposal given by SNMC. The

minutes of the meeting records that three members were

unanimous  in  their  view that  since SevenHills  had not  complied

with the terms and had even sought to encumber the property by

mortgage,  SNMC,  a  UAE  based company, ought  not  be granted

approval to take over the plot and proceed with its project.

42. Now, this court proposes to deal with the contention that the

provisions of the Code override all other laws and hence, that the

45

resolution plan approved by  the  NCLT acquires  primacy over  all

other legal provisions. Facially, this argument appears merited.

Section 238 enacts that:  

“238. Provisions of this Code to override other laws.  — The provisions  of this  Code shall  have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.”

43. The  scope  of this  provision  has  been the subject  matter  of

debate in several judgments of this court. In  Jaipur Metals &

Electricals Employees Organization v. Jaipur Metals & Electricals Ltd.

(2019) 4 SCC 227,  the correctness of  a High Court’s  view which

refused to transfer winding up proceedings pending before it and set

aside  the NCLT’s order admitting an insolvency resolution

application at the behest of a financial creditor, was in issue. This

court held as follows, setting aside the judgment impugned in that

case:

“It is clear that Respondent No. 3 has filed a Section 7 application under the Code on 11.01.2018, on which an order has been passed

46

admitting such application by the NCLT on 13.04.2018. This proceeding is an independent proceeding which has nothing to do with the transfer of pending winding up proceedings before the High Court. It was open for Respondent No. 3 at any time before a winding up order is passed to apply under Section 7 of  the Code. This is clear from a reading of Section 7 together with Section 238 of the Code which reads as follows:

“238.  Provisions of this  Code  to  override other laws. — The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.”

18. Shri Dave’s ingenious argument that since Section 434 of the Companies Act, 2013 is amended by  the Eleventh Schedule  of the  Code, the amended Section 434 must be read as being part of the Code and not the Companies Act 2013, must be rejected for the reason that though Section 434 of the Companies Act, 2013 is substituted by the Eleventh Schedule of the Code, yet Section 434, as substituted, appears only in the Companies Act, 2013 and is part and parcel of that Act.  This  being  so, if there is  any inconsistency between Section 434 as substituted and the provisions of the Code, the latter must prevail. We are of the view that the NCLT was absolutely

47

correct in applying Section 238 of the Code to an independent proceeding instituted by a secured financial creditor, namely, the Alchemist Asset Reconstruction Company Ltd. This being the case, it is  difficult to  comprehend how the  High Court could  have  held that the  proceedings  before the NCLT were without jurisdiction. On this score, therefore, the High Court  judgment has to be set aside.”

44. In the recent judgment in Duncans Industries v. A.J. Agrochem

2019 SCC Online (SC) 1319, the issue was that  action under

Section  16D(4) of the Tea  Act,  which  provides that the  Central

Government  could take  such steps as may be  necessary  for the

purpose of  efficiently  managing  the business of the undertaking,

had been taken. It was urged that any notification under Section

16D has effect for five years, which could only be extended if the

Central Government was of the opinion that it is expedient to do so

in public interest, for such period not exceeding one year at a time,

and for total period not exceeding six years. It was submitted that

Section 16E refers to the power of the Central Government to

restart the tea undertaking if it is found necessary in the interest of

48

the general public. The argument was that an insolvency process is

also meant to culminate in liquidation, if there is no revival, and

that since the Tea Act permits  the Central Government to take over

the management of a tea estate which is not run properly, prior

permission under Section 16G is applicable to such an estate, the

management of which has been taken over by the Government. This

contention was negatived,  by  this  court,  which relied on Section

238 of the Code.

45. In Macquaire Bank Ltd. v. Shilipi Cable Techologies Ltd. (2018)

2 SCC 674, one of the issues was the interplay between Section 9 of

the Code and provisions of the Advocates Act. It was argued that a

demand notice issued through an advocate was not permissible and

that the provisions of the Code overrode all other laws. This court

negative the contention, holding that it is only in the case of

inconsistency, that by reason of Section 238 of the Code would its

provisions prevail. On a harmonious construction of the seemingly

inconsistent  provisions, if the court could  give  effect to  both, it

would do so.

49

46. Dharani Sugars & Chemicals Ltd. v. Union of India &  Ors.

(2019) 5 SCC 480 is a relevant recent decision of this court. The

question which arose in that case was the legality and

constitutionality of directions issued by the Reserve Bank of India,

through a circular of 12th  February, 2018 regulating resolution of

stressed assets of debtors. This court elaborately dealt with

provisions of the  Banking Regulation Act,  1949 and the  Reserve

Bank of India Act, 1934 and held that the power to issue directions

regarding initiation  of insolvency  proceedings vested in the  RBI,

subject to the approval of the Central Government. The court

significantly  held that the  power  was contained  “within the four

corners” of Section 35AA and observed as follows:

“A conspectus of all  these provisions shows that the Banking Regulation Act specifies that the Central  Government is  either to  exercise  powers along with the RBI or by itself. The role assigned, therefore, by Section 35AA, when it comes to initiating the insolvency resolution process under the  Insolvency Code, is thus, important.  Without authorisation of the Central Government, obviously, no such directions can be issued.

50

30. The corollary of this is that prior to the enactment of Section 35AA, it may have been possible to say that when it comes to the RBI issuing directions to a banking company to initiate insolvency resolution process under the Insolvency Code, it could have issued such directions Under Sections 21 and 35A. But after Section 35AA,  it may do so only within the four corners of Section 35AA. 31.  The matter  can be  looked at from a slightly different angle. If a statute confers power to do a particular act  and has  laid down the method  in which that power has to be exercised, it necessarily prohibits the doing of  the act  in any manner other than that which has been prescribed. This is the well­known Rule in Taylor v.  Taylor, [1875]  1 Ch.  D.  426,  which has been repeatedly followed by this Court. Thus, in State of U.P. v.  Singhara  Singh, (1964)  4  SCR 485, this Court held:

‘The Rule adopted in Taylor v. Taylor [(1875) 1 Ch D 426, 431] is well recognised and is founded on sound principle. Its result is that if a statute has conferred a power to do an act and has laid down the method in which that power  has to be exercised, it necessarily prohibits the doing of the act in any other manner than that which has been prescribed. The principle behind the Rule is that if this were not so, the statutory provision might as well not have been

51

enacted. A Magistrate, therefore, cannot in the course of investigation record a confession except in the manner laid down in Section 164. The power to record the confession had obviously been given so that the confession might be proved by the record of it made in the manner laid down. If  proof  of the  confession by other  means was permissible, the whole provision of Section 164 including the safeguards contained in it for the protection of Accused persons would be rendered nugatory. The section, therefore, by conferring on Magistrates the power to record statements or confessions, by necessary implication, prohibited a Magistrate from giving oral evidence  of the  statements  or confessions made to him. (at pp. 490­491)

Following this principle, therefore, it is  clear that the RBI can only direct banking institutions to move under the Insolvency Code if two conditions precedent are specified, namely, (i) that there is a Central Government authorisation to do so; and (ii) that it should be in respect of specific defaults. The Section, therefore, by necessary implication, prohibits  this  power  from being exercised  in any manner other than the manner set out in Section 35AA.”

52

47. In the opinion of this court, Section 238 cannot be read as

overriding the MCGM’s right – indeed its public duty ­ to control

and regulate how its properties are to be dealt with. That exists in

Sections 92 and 92A of the MMC Act. This court is of opinion that

Section 238 could be of importance when the properties and assets

are of a debtor  and  not  when  a third party like the  MCGM  is

involved. Therefore, in the absence of approval in terms of Section

92 and 92A of the MMC Act, the adjudicating authority could not

have overridden MCGM’s objections and enabled the creation of a

fresh interest in respect of its properties and lands. No doubt, the

resolution plans talk of seeking MCGM’s approval; they also

acknowledge the liabilities of the corporate debtor; equally, however,

there are proposals which envision the creation of charge or

securities in respect of MCGM’s properties. Nevertheless, the

authorities under the Code could not have precluded the control

that MCGM undoubtedly has, under law, to deal with its properties

and the land in question­ which undeniably are public properties.

The resolution plan therefore, would be a serious  impediment to

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MCGM’s independent plans to ensure that public health amenities

are developed in the manner it chooses, and for which fresh

approval  under the MMC Act may be  forthcoming  for a separate

scheme formulated by that corporation (MCGM).

48. The last contention of the respondents, that MCGM was bound

by the statement made by its counsel, in the opinion of this court,

cannot prevail. As held earlier, there is no approval for the plan, in

accordance with law; in such circumstances, the written plea

accepting the plan, by a counsel or other representative who is not

demonstrated to possess the power to bind MCGM, is inconclusive.

In this regard, the court notices the well­known principle that there

can  be  no estoppel against the express provisions of law. (Ref.

Kasinka Trading v. Union of India (1995) 1 SCC 274, Darshan Oils

(P) Ltd. v. Union of India (1995) 1 SCC 345, Shrijee Sales Corporation

v. Union of India  (1997) 3 SCC 398,  Shree Sidhbali Steels Ltd. v.

State of U.P.  (2011) 3  SCC  193,  Pappu Sweets and Biscuits v.

54

Commr. of Trade Tax, U.P.  (1998) 7 SCC 228 and  Commr. of

Customs v. Dilip Kumar & Co. (2018) 9 SCC 1.)

49. In view of the foregoing reasons, this court  holds that the

impugned order and the order of the NCLT cannot stand; they are

hereby set aside. The appeal is accordingly allowed, without orders

on costs.

........................................J.

                                           [ARUN MISHRA]  

........................................J.

                                           [VINEET SARAN]  

........................................J.

                                          [S. RAVINDRA BHAT]  

New Delhi, November 15 , 2019.